Resources
So you think you’re ready to Flip? It’s a great time to do it. Buy a property now, and with a little cash and sweat, it will be ready to put back on the market for a fat profit in the Spring.
Search for a Flip
Find Investment Property
Investment property can be any size, from a few hundred square feet to a few thousand, but the ideal flip involves a property in an up-and-coming neighborhood that needs minimal renovation and mostly cosmetic upgrades. You’ll obviously make more money on properties that are priced higher to begin with, but if this is you first flip, it might be best to start small.
Look for a property that has a hot body with bad makeup. Think “hot girl at the yoga studio wearing powder blue eyeshadow and frosted lipstick.” She has good bones but needs a serious makeover!
Look for something structurally sound, with a good roof and ok plumbing and electricity – even though these are all issues that can be dealt with, it’s also where most first time flippers get screwed out of their profits.
Ideally, your Flip will need new flooring and paint, some kitchen and bathroom upgrades, and some landscaping. These are all manageable projects, even if your skills are minimal, and if you aren’t a Handy Manny, these are areas where labor costs won’t break the bank.
HOW TO Flip
You’ve found the perfect property, a diamond in the rough. Now comes the “Fix” portion in the “Fix and Flip.”
Walk through the house and make a very detailed list of everything that needs to be done. Don’t just write down “Renovate Kitchen” and move on. Sit and write down absolutely every task that will need to be completed to make that Kitchen Renovation complete, from “Replace Refrigerator” to “Paint Cabinets” to “Change Hardware.”
This is going to be a very long list in most cases. This is the Reality Check for most people. This is the point where you wonder what you were possibly thinking when you decided to purchase this monstrosity of a property. Take a deep breath. Keep going.
Once your list is complete, go back and determine what you can leave out. Remember, this is a Fix and Flip. This is not your Barbie Dream Castle. Improvements should focus on resale. You have to cater to as many buyers as possible, while keeping costs to a minimum. Could you salvage the cabinets and reface them with paint or stain rather than replacing them? This is a huge cost savings in most cases. How about the bathroom vanities? Could you clean them up and replace the hardware rather than tearing them out and replacing everything?
Next, separate the list into two columns: one list of the tasks you intend to complete yourself and the other list all of the tasks that will have to be performed by contractors. You will save a lot of money by digging in and getting your hands a bit dirty – think of it as paying yourself, because every dime that goes to labor is a dime out of your potential profit.
DIY or Hire a Pro?
At the same time, there are some jobs that are best left to professionals: plumbing, electrics, and major renovations may actually save you in the long run, because on a Fix and Flip, time is money. If you can pay someone to come in and do in a day what it would take you a couple of weeks to figure out on your own, and also make sure that it is done correctly and to code, hire someone.
Now that you have two lists, create a spreadsheet in order of priority. Determine the order that projects will need to be completed, and the ideal time in which they can be done.
Call several professionals for bids on each project, and schedule them to work simultaneously – there is no reason why the bathroom cannot be retiled while the new kitchen island is being installed.
The next list you will need to create is for Materials, from kitchen appliances to tile and hardwood flooring to nails, screws and paint. Fixing and Flipping involves a ton of shopping, and bargain hunting is key. Don’t assume that the Carpet Warehouse down the street has the best prices on tile and flooring materials – there are so many resources for high quality, bargain materials, but you have to be willing to look. Floor and Décor is a great place to find a good deal. Your contractors may also be able to get you in with their suppliers – ask them if they have wholesale access to any of the stuff you will need.
Craigslist is another great resource for Fix and Flippers – you can sell the stuff you are replacing and find great deals on some of the stuff you need. The key to Craigslist is consistent searching – if you see something you might want, contact the seller immediately because great deals tend to disappear quickly.
As you are making decisions, keep in mind your ultimate goal – to create an attractive home for a broad range of buyers. Neutral paint and flooring, stainless appliances, open floorplans, nice kitchens and bathrooms, clean, bright, and new are all keywords that realtors will use when listing your home. These are the things that today’s buyers are looking for.
Check out the Competition
Take an hour on a Sunday and tour the Open Houses in the neighborhood. This is a great way to get ideas for what you do and do not want to do with your Flip. Listen to what people are saying about what they do and do not like about the home. These are your potential buyers.
As you are working on your Flip, the most important things to keep in mind are your timeline and your budget. Try to stay on track and save both time and money when possible. Unforeseen issues are bound to come up – termites, asbestos, and mold are a few that frequently catch Flippers off guard. But hang in there, every issue can be corrected, usually at a minimum expense. And the profit will still be there. Done correctly, a Flipper will see thousands, if not tens of thousands of dollars in profit.
